7 - A Colonial Debt Crisis: Surabaya in the Late 1890s

Summary

The final three decades of the nineteenth century witnessed a distinct weakening of international markets, especially for primary products. Expansion in world trade decelerated, and this affected the Indonesian economy. Trade volumes continued to increase, but much less rapidly than in the 1850s and 1860s. It would take until the beginning of the twentieth century before this slowdown was reversed. According to tentative calculations, GDP per capita rose about thirteen per cent over the three decades 1870–1900, whereas it took less than half this time to achieve a growth of twenty-three per cent in the period 1900–13 — and most of the latter growth was actually achieved after 1905 (Booth 1998, p. 6). Other economic aggregates show the same kind of trend: the money supply, for instance, expanded much less quickly between 1885 and 1900 than it had between 1874 and 1885. Of greatest concern to the indigenous population was the poor performance of the foodcrop economy, which failed to keep pace with population growth. Per capita rice production and consumption fell after 1885, although the simultaneous expansion of nonrice foodcrops ensured that there was no mass starvation. Judging by the downward movement of cotton cloth imports in the late 1890s and early 1900s, indigenous purchasing power also declined, if only for a relatively short period of time (Booth 1998, pp. 22, 33, 95, 100–04).

In his eminent two-volume history of the Javasche Bank (Java Bank), published to commemorate the centenary of the bank in 1928, L. de Bree characterized the 1890s, together with the first three years of the following century, as “possibly the most worrisome period in the history of the Netherlands Indies”. Looking back on those difficult years, his recollection of the deep and the general sense of malaise pervading the colony was still vivid. The effects of the slump in export prices had been exacerbated by recurring outbreaks of cattle and crop disease.